A report reviewing the challenges facing the private sector.. Al-Kazemi’s advisor talks about solutions

A report reviewing the challenges facing the private sector.. Al-Kazemi’s advisor talks about solutions

2021.09.05 – 17:02

A report reviewing the challenges facing the private sector.. Al-Kazemis advisor talks about solutionsBaghdad – people

A press report sheds light on the private sector in Iraq, the problems it suffers from, and their impact on investment opportunities and local capital.

The report, published by The Independent Arabia website, followed by “Nass”, (September 5, 2021), says that “the private sector in Iraq has suffered from great marginalization with succession of governments since 2003, as they did not succeed in putting it on the right track, in addition to the absence of His role in the most important stages the country has gone through.

Following is the text of the report:

Private factories and companies ceased after the American occupation of Iraq in 2003, and dependence on foreign imports became mainly, in addition to the weak investment in the country, which contributed to the total dependence on the government sector, so that the citizen preferred the public sector that guarantees his rights in the post-retirement stage. In addition to the salary it provides, unlike the private sector, which did not form an essential part of building a post-2003 Iraq.

The private sector suffers from several problems, including obstruction by the state through the complexity of procedures and the lack of an ideal environment, which prompted the majority of businessmen to pack their money and transfer it abroad for investment and work.

Absence of policies to build a market economy

The private sector in Iraq is trying to rise, but many obstacles face it, and Mazhar Muhammad Salih, the financial advisor to Prime Minister Mustafa Al-Kazemi, attributed the reasons for this to the fact that “there are no homogeneous policies in our country to build a market economy according to institutional structures and organizations.”

He added, “The market is just a wheel that moves with the strength of the government’s economy, public spending and oil wealth until the consumer business cycle completes its movement in our country. The private sector is the customer of the government’s economy and lives from it. With the exception of supporting food security for grain, the policy of supporting agricultural investment is still ambiguous and the private agricultural sector that It includes about 90 percent of the agricultural activity in the country, and it still depends on the government agricultural infrastructure, which constitutes 83 percent of these agricultural infrastructure, and it is in dire need of investment and renewal after it has become dilapidated, so the agricultural market today contributes only 4 percent. or less than annual GDP and comprises 21 percent of the labor force.

Saleh pointed out that “the private industrial sector, which includes more than 50,000 factory units and has about 750,000 industrial workers, is still an idle force and works partially, perhaps with less than 10 percent of its activities and design energies, offset by an industrial public sector that is also unemployed. 80% of the workforce and more than half a million workers.

He revealed that “the contributions of the manufacturing sector to the annual gross domestic product are still less than 1% and comprise 16% of the labor force. Thus, the production markets for the private sector are still accompanied by a third market, which is the labor market that lacks regulation, security and social protection.” Under the pressure of 450,000 new workers enter the market annually, which magnifies unemployment rates due to the weak growth of the market economy.

It also transformed the national market mostly into a liberal consumer force that includes real marginalized sectors, which are the main industrial and agricultural sectors.”

He explained that “the real production markets, especially the agricultural ones, are still floundering in the problems of import dumping and its escalation. Cross-border prevention is carried out seasonally according to an agricultural calendar from time to time without controlling the transitory and uncontrolled agricultural smuggling, which made the country lose about 200,000 dunums annually in exchange for Salinization, desertification, neglect and rural migration, while the manufacturing industry for the private sector, after decades of neglect, lost its expertise or the so-called deterioration of human capital accumulation due to the cessation of the factory and the industrial worker.

Rapid liberal market boom

Saleh stressed that “the only prosperous market today is the fast-returning liberal commercial market that generates capital accumulation, which enjoys easy interaction with the globalization economy without productive capital accumulation at home. The country needs to build the market again with the availability of three basic factors that contribute to supporting the real productive private sector.” The first factor is the availability of disciplined customs protection in tariffs and borders that helps the local product sustain growth, investment, expansion and continuous operation at high rates of growth through the application of the effective national product protection law, and the second factor is the availability of a subsidy policy in fuel and electricity as it is the basis of the production dilemma.As for the third factor, it is building market institutions, whether by providing social security for workers with a correct and explicit law, as well as spreading the system of companies that truly form the centerpiece of market institutions, and with government facilitating procedures, whether in granting licenses or canceling the company when needed, so that the system of companies facilitates A tool that helps the private sector obtain direct financing from banks, as well as reforming the tax system and making it more accessible and simple in dealing with productive activity and with high governance.

On the other hand, economic researcher Hamzah Louay Al-Hardan said, “The private sector needs certain conditions in order to take its role in the renaissance of the economy and the provision of job opportunities. Unfortunately, the work and investment environment in Iraq did not provide any factors that would support the private sector.”

The lack of security and political stability

Al-Hardan considered that “the lack of security stability affects the private sector, and the absence of political stability and the confused situation affects the private sector. The bureaucracy in state institutions that investors suffer from, which may require more than 70 final signatures, drains the investor’s time, effort and money… All these obstacles eventually led to the lack of real activity of the private sector in Iraq.

Al-Hardan reviewed the most prominent solutions, saying that “in order for the government to encourage the private sector, it must address these problems as well as activate laws that would provide support and protection for this important sector. The financial and banking institutions that do not provide support for owners of small and medium enterprises that are considered The backbone of the national economy, and job seekers should be encouraged to go to the private sector by enacting laws that contribute to equality between work in the public and private sectors, including social security, employee rights and privileges, including granting housing loans or others.”

He stressed that “in the event that the situation continues as it is, the problem of job slack in the public sector and stagnation in the national economy that has reached the stage of depression will continue, and the rates of those classified under the poverty level will remain, which reached more than 38 percent of the total population in Iraq.” as it is.”